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Power price deregulation comes into effect

Power companies have been allowed to set the price of standing energy contracts in SA.

Damien Larkins, file photo: ABC News

The South Australian Council of Social Service (SACOSS) has cautiously welcomed further deregulation of the electricity market that has come into effect today.

The state's energy watchdog, the Essential Services Commission (ESCOSA), no longer has the power to control the standing contract price for electricity and gas.

In December, the Government announced it would allow default retailer AGL and Origin Energy to set prices, in return for AGL dropping legal action against the commission.

The State Government said the move would prompt fresh competition and lower prices, benefiting 130,000 AGL customers.

Greg Ogle from SACOSS says if prices do not drop, the Government should hand price regulation back to the commission.

"We're keen for the Government to continue to monitor prices because if the price reductions aren't delivered we'd like to see the Government step in again and re-regulate the market," he said.

"There's no doubt that energy prices are hurting a lot of people in South Australia, a lot of low-income households, and the deregulation and greater competition might deliver some lower prices but that's not the end of the story.

Mr Ogle says the deregulation needs to be coupled with more support for those who are doing it tough.

"We know energy prices are a great driver of poverty so we're pleased with anything that will lower energy prices," he said.

"But we want to make sure that those price reductions are delivered across the board, not just to customers on standing contracts."

Energy Minister Tom Koutsantonis says the Government will intervene if power companies take unfair advantage.

"We do have the ability to re-regulate if we think that energy companies are beginning to price gouge," he said.

"ESCOSA will maintain the role of an observer keeping a close watch on what the base price should be.

"If we think energy companies are profiteering to a point where they're ripping people off, we'll step back into the market."

Mr Koutsantonis says AGL will now be forced to compete to retain its customers.

"This deregulation means that their customers are up for grabs, which means that every other energy retailer's trying to get as many AGL customers to switch," he said.

"That's why you've been seeing full-page ads by AGL in the paper offering people to sign contracts offering up to a 9.1 per cent discount. A lot of their competitors are offering more."